In this month’s column Kate Ervine considers the recent news from Ulster Bank and the potential challenges that lie ahead when a loan is sold onto a third party.
Ulster Bank confirmed the completion of a sale of a significantly impaired loan portfolio to US investors Cerberus.
In a statement from the bank it was stated that the loans in question have been in arrears or under specialist management for a significant period of time.
It is reported that the value of the Northern Ireland loans is in the region of £261million and the sum includes £22million in agricultural loans in the province.
Having recently dealt with a number of business clients whose loans have been sold to Cerberus JPH Law has first-hand practical experience of the difficulties that may lie ahead.
Property developers were one of the main business sectors to be first hit by the sale of loans to third parties.
Often the purchaser of the debt is in an entirely different jurisdiction where the legal requirements are diverse in respect of money laundering requirements and other due diligence checks.
The agricultural sector is clearly uniquely different to any other business in that even if a portion of land or livestock has to be sold to meet debt and arrears and interest this could seriously compromise the ongoing viability of the farming enterprise particularly in the precarious times we now find ourselves
The reality is that in a lot of cases the security provided to the lender incorporates not just agricultural lands, sheds and handling facilities but also the farmhouse.
Our advice, we would strongly urge the farming community to review their current facilities irrespective of who their lenders are to ensure that the security is in order and that the entirety of their title documents are not placed in the Bank as security for a small loan.
Kate Ervine, Director at JPH Law, Montrose House, 17/21 Church Street, Portadown, County Armagh, BT62 3LN 028 38 333 333 firstname.lastname@example.org